The Voluntary Disclosures Program (VDP) offers a valuable opportunity for Canadian taxpayers to correct past tax errors without facing full penalties or prosecution. As a tax lawyer specializing in CRA disputes, I’ve assisted numerous clients in utilizing this program to achieve compliance efficiently.
The VDP allows taxpayers and registrants to come forward voluntarily to fix inaccuracies or omissions in their tax filings, such as unreported income or incorrect deductions. To qualify, the disclosure must be voluntary, complete, involve a potential penalty, and generally relate to information at least one year past due. Relief typically includes waiving penalties and avoiding criminal prosecution, though interest on overdue taxes still applies, with the extent of relief depending on the new tiers introduced in recent changes.
Effective October 1, 2025, the CRA implemented significant updates to the VDP to enhance accessibility and simplify the process for correcting unintentional errors or omissions. These changes apply to applications received on or after that date and include a streamlined Form RC199 for submissions, which requires supporting documents like returns, forms, and schedules for the most recent specified periods: up to 10 years for foreign-sourced income or assets, 6 years for Canadian-sourced, and 4 years for GST/HST.
Eligibility has been expanded to include taxpayers prompted by CRA communications, such as education letters about potential non-compliance, though those under audit, investigation, or involved in egregious non-compliance remain ineligible. The program now features two relief tiers: general relief for unprompted applications, offering 75% interest relief and 100% penalty relief; and partial relief for prompted applications, providing 25% interest relief and up to 100% penalty relief.
These updates make the VDP more approachable for potential applicants by reducing barriers, broadening who can qualify, and providing clearer, tiered relief options that encourage timely self-correction. For instance, unprompted applicants benefit from greater financial relief, while prompted ones still receive meaningful incentives to comply without full penalties. In practice, the CRA reviews applications case-by-case, and the simplified process can prevent escalation to audits or enforcement for issues like excess RRSP contributions, offshore reporting, or gig economy activities.
At Alexander Tax Law, we guide clients through the updated VDP process, ensuring submissions are thorough and strategic to maximize available relief. If you’re considering a voluntary disclosure under the new rules, contact us for expert advice tailored to your circumstances.
